An actuarial study just released by the Minerals Council of Australia (MCA) reports that moving away from fossil fuel investments “could cost a 45-year-old almost $58,000 in lost retirement savings“. In recent months, many institutional investors have announced a move away from coal investments in favour of clean energy portfolios, and it seems that the Minerals Council and its Chief Executive Brendan Pearson are using this report to continue the onslaught against a culture of change and sustainable development. This comes in the same week that the MCA announced a Leadership Roundtable for the development of Low Emissions Technologies for Fossil Fuels, heavily promoting the benefits of cleaner coal, oil and gas power generation.
With these releases the Australian coal industry has gained some ground, just as renewable energy providers are starting to feel the pinch of an uncertain energy policy future. One major renewables investor IFM Investors announced yesterday that it had made a $658 million write-down on its Pacific Hydro business. IFM CEO Brett Himbury has cited this lack of energy policy in addition to falling energy demand as the main catalyst for the devaluation of its Australian asset.
The aggressive stance of the Minerals Council, made undeniably clear by Pearson’s somewhat panicked comments in May this year, aligns with the wider government stance on the importance of coal in Australia. Unfortunately reliance on coal as a long term energy solution forces the Australian economy to measure development based solely on quantitative growth. The Abbot Government’s repeal of the Renewables Energy Target, the recommendations of the Warburton Review and current policy uncertainty are all hallmarks of an unsophisticated mindset – one that was strongly questioned by delegates at September’s UN Climate Summit in New York last month.
Australia economic longevity can only be borne out of qualitative economic growth; improving the value of outputs without increasing raw material inputs. In terms of qualitative energy measures, diversifying our nation’s energy mix to rely on reduced coal and increased renewables will enable the Australian market to realise economies of scale and real GDP growth without overburdening our natural resources or the environment. Renowned economist Paul Krugman’s comments on quality vs quantity are quite apt: “We’ve [hit] that hard energy limit: [growth] will be restricted to the rate at which we can improve our use of energy: or, if you prefer, to the rate at which we can work out how to use that limited energy in ever more productive ways”. This idea is supported by a report by the Global Commission on the Economy & Climate released last month which states that slowing climate change stimulates economic growth.
It is disappointing that even after Australia’s dismal performance at the UN Climate Summit in New York (vilified immediately by Gambia’s government and indirectly by Obama in his address), the Australian Government is still struggling to build a more sophisticated regulatory regime. Instead it looks to the distraction of the G20 Summit next month where it will continue to promote, as the ABC has coined, its ‘addiction to growth’.
With this coal vs renewables argument continuing unabated in the media spotlight, it is almost as if the Abbot Government has lost sight of what is important for the future of our economy – they can’t see the wood for the trees. Or perhaps its more that they can’t see the smoke for the haze.